China Sun Group: Growth Prospects

JUNAN COUNTY, Shandong Province, China (TheStreet) -- China Sun Group(CSGH) is the second largest manufacturer of cobalt-based materials for lithium-ion batteries in China.

Mr. Fu Guosheng, the company's vice president and COO, recently sat down with TheStreet to discuss the company's history and prospects.

TheStreet: Can you provide some background of the company?

China Sun Group, through 100% owned subsidiary Dalian Xin Yang High-Tech Development Co, produces cobaltosic oxide and lithium cobalt oxide. We started to produce lithium iron phosphate and plan to expand production over the next three years. We are still focusing on the cobalt products to keep a stable revenue stream. In 2008, we started getting into the new lithium battery industry, producing the new LIP products, which is our major focus in the future, because this is the most cost-effective and high-technology battery in the industry.

What is the status of your cobalt project in Congo? Will margins be substantially helped?

We postponed the Congo project and changed our business strategy accordingly due to the shipping time and changes in the Congo government policies. We will get cobalt in China, not only because it is cheaper in China, but also it saves time because of the geographic proximity of shipping.

Where do you see the company in five years? 10 Years?

We plan to build a unique model to supply the raw material for lithium batteries, and will produce our own lithium batteries, which is one of the major components of future battery-powered automobiles. We will be a holistic provider of the raw materials for auto batteries as well as the finished product for automobiles and electronics.

What are CSGH's competitive advantages?

First, we have advanced technology; we are proud of the automation we have achieved. We have built up our technology over a long time to keep competitors out and do not believe it could be easily duplicated.

Second, we are creating a multi-production model. We are not only focusing on LIP as a raw material, but also on the finished battery products.

Third, we have substantial cost advantages over our competitors which allow us to produce the same high quality products at a lower price.

Who are your main competitors?

There are many competitors in China as well as in Korea and Japan. In LIP, we think we have a unique position and competitive advantages not only because of the technology exclusive patent, but also because of our holistic production model. Around 40% of lithium iron phosphate will be used within China Sun to produce Power Li-Battery, which sells to major electronics manufacturers. Moving forward, our major clients will be not only Li battery manufacturers looking for lower cost and high quality cobalt oxide sources, but also ourselves.